The tax savings time starts during the start of the year when the officer asks you to send proofs like investment declaration and all for tax savings.
The old employees know the right ways to avoid paying the excess tax, but the young earners are not aware of it so much.
Here are some tips that young earners can follow in order to save excess tax:
House rent allowance (HRA):
If you want to avail of the house rent allowance, then you need to submit some receipts or the agreement for rent.
If you pay rent more than RS 8,333 every month, then you need to give the landlord’s PAN number because it is mandatory.
If there is no rent agreement with you, then you can submit a signed declaration from the landlord.
The young earners could save paying excess tax by claiming the deduction on the education loan if you took it during your higher studies.
There is an income tax act which allows you to claim the deduction on interest of the education loan if you have taken any.
The entire amount of interest can be deducted, and it is only applicable for eight years.
The main amount is not considered for the deduction, but if the individual is paying interest on the loan, they can claim a deduction.
You need to give some documents to claim the deduction of interest on the loan.
An individual can also claim for deduction of the premium that is paid for the health insurance.
The deduction can be availed for the health insurance paid for self, spouse, or children.
If you avail of this deduction, it can help you save the excess amount that you tend to pay as tax.
The young earners can save their money by claiming this deduction.
The maximum amount that you can claim on the deduction of the health insurance is around Rs 25,000.
There is a certificate that the person is issued while purchasing the insurance, and it will later help you in claiming the deduction.
You can also show the receipt that you get for the insurance when you are claiming the deduction.
You just need to submit the photocopy of the documents, and the extra amount of tax will be deducted from your salary.
The young earners can save a lot of money by getting this amount deducted.
Use the tax breaks that are offered under the 80C section:
If you have investments more than Rs 1.5 lakh on avenues, then you can claim for the deduction on tax because of that.
If you contribute to the employee’s provident fund (EPF) with your salary, then the contribution will automatically deduct the amount which you do not need to pay on the total tax payable by you.
The amount is calculated and adjusted when the total tax payable amount is given to the person.
There are a lot of expenditures that come under this act and help in deducting the amount payable on tax.